Endogenous ownership structure:factors affecting the post-privatisation equity in largest Hungarian firms


Using a data set for the 162 largest Hungarian firms during the period of 1994-1999, this paper explores the determinants of equity shares held by both foreign investors and Hungarian corporations. Evidence is found for a post-privatisation evolution towards more homogeneous equity structures, where dominant categories of Hungarian and foreign owners aim at achieving controlling stakes. In addition, focusing on firm-level characteristics we find that exporting firms attract foreign owners who acquire controlling equity stakes. Similarly, firm-size measurements are positively associated with the presence of foreign investors. However, they are negatively associated with 100% foreign ownership, possibly because the marginal costs of acquiring additional equity are growing with the size of the assets. The results are interpreted within the framework of the existing theory. In particular, following Demsetz and Lehn (1985) and Demsetz and Villalonga (2001) we argue that equity should not be treated as an exogenous variable. As for specific determinants of equity levels, we focus on informational asymmetries and (unobserved) ownership-specific characteristics of foreign investors and Hungarian investors.

Divisions: College of Business and Social Sciences > Aston Business School > Economics, Finance & Entrepreneurship
Additional Information: The archived file is not the final published version of the paper Bishop, K., Filatotchev, I., & Mickiewicz, T. (2002). Endogenous ownership structure: factors affecting the post-privatisation equity in largest Hungarian firms. Acta oeconomica, 52(4), 443-471. http://dx.doi.org/10.1556/AOecon.52.2002.4.3
Publication ISSN: 1588-2659
Last Modified: 29 Nov 2023 10:29
Date Deposited: 11 Mar 2019 18:16
Full Text Link: 10.1556/AOecon.52.2002.4.3
Related URLs: http://www.akad ... con.52.2002.4.3 (Publisher URL)
PURE Output Type: Article
Published Date: 2002-12
Authors: Bishop, Kate
Filatotchev, Igor
Mickiewicz, Tomasz



Version: Accepted Version

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